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neil: by now you know about bank of america settling with fannie mae, when does fannie mae settle with us? any deal where fannie mae comes outlooking good has got to be bad. i'm neil cavuto, when does fannie gets it fannie kicked? when is fannie going to cult a check -- cut a check to tax pace ipayers in the usa. why can't we garnish fannie for not paying us? that is the story folks that people are missing today. not that a major bank is paying 10 billion smackers to settle some loans with fannie, don't

you find it odd that fannie is taking -- when taxpayers continue to get the shaft, a most gang lender -- mortgage lender whose little bi politicas date back to the clinton days? and the beneficiaries of bailout who collective are second to none, that does not make sense. it does not represent so much as a drop in the bucket. government watch dog, said that is the problem with bailouts, taxpayers keep losing out. tconsideratioty young is here t. the markets were sanguine on this, saying no surprise, blah, blah, blah, but i think it is offensive. >> of course, it is offensive,

when bank of america took over countrywide loans under tarp the federal government agreed to payback any losses that bank of america had, when bank of america writes a $10 billion check to fannie mae, tax payers will be on the hook, the executives of fan may and freddy hacker losing money, and still getting bonus us. in private sector you get fired. neil: you know what is weird is that. the bank is paying the penalties for an entity that government all but forced it to buy. you have to wonder when fannie gets its just desserts and we get just some of our money. >> you know this is a sweet deal for the gse's that continue to override. you know you hit the nail on the

head, 10 billion-dollars, that in the scheme of things, does not seem like a lot. but to the taxpayers who are footing the bill for the bailouts for the morale hazard that the government continues to encourage, that is a lot of money that sets stage for what we'll see. more government intervention, and the banking system. neil: where does that money go? 10 billion, and they have to be a big old fund to make -- who were burnt. i think this is an open box that everyone raids? >> absolutely. this is a slush fund to continue the government-sponsored enterprise of allowing banks to make risky lending decisions, knowing that the taxpayers will bail them out in the end. looking at countrywide deal, no rational person would have taken that deal. bank of america will dive right

in they know it is a cash cow for them in the end. neil: you know, ty, leaving aside the hypocrisy of this and everyone taking bows at fannie. that force ibly had to buy something from us and pay us it gets convoluted. how can wall street accept or continue to feel good about being very, very much joined at the hip with the same government it wants to break from? >> it is interesting, the market is trading on the government printing money. it is a hard relationship. the reality is -- >> what happened to the days when guys like you, used to espouse out of my backyard, out of my business, i'll make it on my own, i'll fail on my own. >> i agree.

as far as fannie and freddie, we should pull their charter, sell their assets and not have the goal of lending money to people who are not creditworthy, if we continue on the same path we're on. we can ex pects the same results of last time. neil: what is it with freddie and fannie, the institutions that are never investigated. kept out of big laws, the executives either have compromising photos of the powers that be in washington or there is a blind spot? >> the government gets involved, they are hungry for more, they see fannie and freddie as their way to the private ente enterpre that used to exist in the banking community. and we're going to see a lot

more of this rule making that allows the gse's who are sucking taxpayers dry to continue these practices. a problem we'll continue to see. neil: i keep thinking of $10 billion they got, and a fraction of what they owe us. i am just crazy. >> thank you very much. >> thank you, neil. neil: you provide reason. now once you strip away the waste it comes down to, well, the stripper. you see these pole dancers, what if i told you, your tax dollars at work. who knew the skinny on spending was -- wellics skin. well skin. >> he wants to be as transaction formational a president as reagan was, what he seeks to do is erase every trace of reagan from america.

america. >> here to say, you know something, russia is right. ♪ grew up in a small town and when the rain would fall down ♪ ♪ i'd just stare out my window ♪ ♪ dreaming of what could be and if i'd end up happy ♪ ♪ i would pray i could breakaway ♪ ♪ i'll spread my wings and i'll learn how to fly ♪ i'll do what it takes till i touch the sky ♪

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neil: i heard of badge for the buck. but what the buck? i practiced that a few times before this segment. you would have to wonder why i would not trust these guys with a 10-foot pole even if it is a stripper's pole. they are stripping us bare. ing oing-- ogewell,ing women whe just about bare. >> what happened here? >> deja vu in words of yogi berra, when i became mayor of new york city, the d.a. did an investigation, and found something like hundreds of people, that were double

recipients of welfare, sometimes triple, including some in the police department. i instituted a program of fingerprint. we did finger imaging, it was an outrage, liberal media went crazy, this was offensive to ask people getting their welfare check to get fingerprinted. everyone who worked in my administration had to be fingerprinted. that was not offensive. we got rid of a couple thousand people who would double collect. they would go to the bronx, and manhattan, and queens, they spend their week collecting 4 welfare checks. neil: this is a different case, they get the electronic debit cards, like credit cards. so you can use them for anything. and now a lot of free rights folks say, well then, don't stop, spend as they wish. >> this money spending has to be acountable, this is the taxpayer

money, not your money or minor the government, this belongs to the taxpayer, when do you this, you hurt programs for the truly needy people. they wonder who the heck is going on. there is abobligation on the government to have a count built for these programs, make sure that money is not given out with cash even with a credit card that can only be -- >> i think it should be tough. >> the card should only be redeemable in certain places, you should only be able to use it for food, and clothes, not in a bar, not to get, you know in ache electric or store. this is the problem with food stamps. neil: they argue with this electronic program. i don't know what it is called. >> i can't imagine that this is would save money. but even if it is a wash. money is using for unaccountable

purposes like strip clubs, this undermines the integrity. neil: it would help the stripping industry. >> i have found they do not pay there are requisite share of taxes. neil: oh, that's right. the more you spend the rule of thumb is the more you waste. if you buy that 10% of waste and abuse then it out of control. >> the objective to you should put these people to work, i said if you want your welfare check, you have to work 20 hours a week, that got a lot of people off of welfare right away, that created a lot of howling, but it was one of the smartest things i did. we got off welfare, and most of them got jobs. neil: i remember you were vilified, antihomeless guys, you were not afraid to take on a media that would portray you as

heart less. >> i went, i said, look, you can't live on the street. does not help you, does not help me, for you to live on the street. i'm not doing you any favors to let you live on the street, if you have paranoia, you get more paranoid. if you are a drunk, you become a bigger drunk, if you are a drug addict, you become a bigger addict. they had an option, you come with me to a shelter to evavalue you, put you in the right program or get up and get out. i would go to the homeless groups, and say i am the one that really loves you, i care about you, because i want to take care of you, if my brother was in the street, would i let him stay on the street or would i engage ? knowing my brother i would.

are you afraid of tough love, they get a rap for being of antipeople part, the -ntiminority part. >> i think we've been pushed into a corner so much with the exception of jack kemp very few knew how to talk about the results, the reality is if we push you toward work, and making well fair harder to get, and we're trying to keep nut workforce we're fighting to save you, we're fighting to keep you able to take care of yourself, and your family, not to depend on somebody else, that is what do you for someone you care about. if you had a person you loved, and they were in trouble, you would help them for a while but you would nom take -- not takeover their entire family, you would try to get them a job. a lot of welfare reform that was started by tommy thompson in wisconsin, that i borrowed and used in new york, then became part of federal law, a lot of them are undercut by what obama is doing with the extensions of

s benefits and more benefits, and extra benefits and they don't make benefits hard, they should be hard, a counter react happens, they look for other alternatives, you make it easy then you have everyone on welfare. neil: like a normal rockwell community. >> this south ragous. neil: mayor happy new year. >> good luck. neil: rudy giuliani, they just hit the limit on ways around the debt limit, one of the most powerful players in congress is seeming to raise it, and congress cannot do a darn thing about it, this is amazing. the boys use capital one venture miles for their annual football trip. that's double miles you can actually use. tragically, their ddy got sacked by blackouts. but it's our tradition! that's roughing the card holder. but with e capital one vente card you get double miles you can actually use.

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neil: nancy playing fast and loose with history, and maybe the constitution, using the 14th amendment to hike the debt

limit. and congress cannot do a thing about it. how is a amendment that lincoln inspired, now economy pand on -- expand to all matters of debt, it ceases on section 4 of the amendment, back then to supposedly shield u.s. government from among other things going broke, paying countless financial claims by former u.s. slaves, but presidents dating back to bill clinton have used 14 amendment on argue to raise the debt limit am and congress has already made, to the judge on whether nancy pelosi is within your bounds or not, judge andrew napolitano. >> she should know, she was around when the 14 amendment of the ratified. neil: that is mean. >> really, the 14 amendment, said, the states have to afford equal protection, they cannot have slavery any more, or

discriminate on race, they have to enforce their laws equally, that is the purpose of 14th amendment. there is a clause that says, the public debt of the united states of america shall not be called into question, if they finished the sentence they would have said by the states, the reason was when southern states came back into the union, they were taxed to pay federal government's debt for fighting the civil war against them this amendment prohibited them from resisting paying that tax this says -- it means for purpose of a civil war, that/say the states cannot contest the val edtie of validity of the public debt. today, presidents have been borrowing money to fund the federal government since 1917, woodrow wilson, not one of them, not a single one liberal or conservative or republican or

democrat or progressive orelon , libertarian has borrowed on his own, overly aftely -- only aftee congress has authorized it. neil: nancy pelosi is willing to take the house out. >> something happens when you get into the minority to suggestion that president could borrow money on his own, who would lend money to just the president, that does not have the full faith and credit of the united states to pay it back. neil: when they talk up a trillion dollar coin that fed compared to a back up -- we're coming up with creative ways around raising the debt without addressing the debt. >> they don'tment to acknowledge that the real problem is spending, they don't want to stop the spending even republicans, who went a long with the so-called, phy fiscal f

addressing. neil: this happened almost 50 times, what would a president napolitano do? >> not borrow any more money, and government would live within its means. neil: you would risk a debt ceiling? what do you do with that moment. >> i would not borrow any more money, we would stop paying our bills, a president who believes that the constitution means what is says would not get us into a situation where we run out of cash on the first day of february. that president will have enough money to pay the bills to the federal government, federal government collects about $2 .7 trillion in revenue. .7 trillion in revenue. >> you can rob peter to pay

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neil: to hear nancy pelosi and scores of other democrats tell it over the weekend, they are just getting started with tax hikes this year, and president agrees, keep it planned he said. never mind that balance ratio did not work out. deal was more like 41 to 1.

40 times as many taxes to cuts. ed niece is you on this goes from bad, to maybe a worse deal what do you think? >> well, i think it is a terrible. and i think it is a fraudulent act on the part of the minority leader of the house. to think that republicans would put up with anything they are talking about, we have a unfair tax system where so-called rich, the people called higher earnings are paying way higher pro portion of the tax burden. neil: with its new ratio it will be about 41%, but you are quite right, that eld expression, give then an inch they will take a mile, how do republicans counter that? if they could say we have given away the tax thing, you got your

way mr. president. he comes back and says, i wanted $1.6 trillion, then what? >> well, i think first of all they have to aquaint of public with the facts. neil: they have been lousy as at. >> absolutely. and to point out that many people have said, that is we can't tax our way out of this problem. we have to do something about the spending. this administration has been derelict in fiscal responsibility in which the way they spent. we have extraordinary expenses under the so-called stimulus spending in 2008-2009, but in 2011, 12, there was no stimulus but the budget, and spending still went up. in other words, regular expense of government just rose during that period of time to take care of the vacuum, that had been created when there was no more

stimulus. neil: i am wondering if there is a bigger agenda at stake mr. attorney general, harkens back to something that rush limbaugh said. >> he wants to be as transformational a president as reagan was, and what he seeks to to is, race every trace of reagan from america. >> what do you make of that? >> i think that russia is -- rush is on to something, he wants to be a transformational president, he wants to turn the u.s. ask greece. neil: you do have to wonder, he is like ronald reagan in reverse, both, very car good at communicating with the people, but different messages, it seems this president saying, remember that president that everyone liked that. well, that era of smaller

government is over, that era of getting all of the excessive government spending you were control is every, and thisser av tax cuts for everyone is over, he got elected arguing at least hiking taxes on the rich, is the country changing more barack obama's way? >> i think it is changing to this extent, that is that people do not realize, and unfortunately the republicans did not rebut what the period said when he said things like the rich are not paying their full share, as we pointed out they are paying more than their share, but nobody pointed out the facts on the other side. there is one big difference between the two presidents, that is ronald reagan always toi tole truth. neil: you have to wonder with a president who is set on not going far in spending cuts, and ascertaining more tax hikes, what the environment will be

like in washington, especially with a lot of republicans they seem to be running scared. >> that is where just as mayor giuliani said, the republicans should not run scared, they should tell the truth, and get the facts out to the people. >> jim: but they are not doing it. >> they are not doing it. maybe the mainstream media is ignoring them, this is a simple message, if you want to government to grow at the rate it is growing, and you are okay with this big government you see, you have to pay for it, a lot more than we are now, and a lot more than hiking taxes on the rich, now, but they can't get through the noise. >> well i don't see much of a attempt to try to get the facts out to the people, i think that have to figure out a way to connect with the people and be able to tell them the truth. you know margaret thatcher said that the problem with socialism or kind of government that obama

is trying tony flick o to inflat sooner or later you run out of other people's money. neil: we might be seeing that now, a lot of americans seeing payroll tax cut makeo taken away -- we have a situation where 80% of working americans are seeing their taxes go up at the beginning of the year, president vehicle kept that going to to focus on fact, see only rich seeing their taxes go up, this might have reminded folks, my taxes just went up on up, what happened now? >> well everyone's taxes are going up, and social security tax going to up is just a small part, we have all kinds of taxes going up because of the so-called obamacare, and new levees of various sorts even a tax on medical devicesf so the poor people who happen to be ill

or injured, will have to pay -- haveb taxes about up as well. neil: amazing ed meese, happy new year. >> thank you, happy new year to you. neil: ed meese, now that you have time to sink in look at that first 2013 paycheck f yours, and get ready for this. you are getting well less, you e about to pay more, more not taxes but more everything else. [poignant country music] ♪ ♪ remember when

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neil: off the cliff but your bills are going through the roof, from food, to airfare, and rent and trash, you are not saving any money, or your hiney. chief economist from wells fargo, saying it will not save

the economy's hiney either. what is this year look like for you? on the inflation front? >> some people would characterize this as moderate inflation, but reality is, neil, that you have inflation rising at about 2.5%, that is faster than average wage growth, real wages are fe clients, -- are declining and real disposable income has declined for most. neil: do you know, where i think that makes a difference in 20 2013, the first year that 8 out of 10 americans are seeing less in take home pay. whether it is payroll tax cuts or tax hikes in upper income, and ancillary taxes to pay for health care bill. combine that with the higher prices, we have a problem.

>> we have a real problem. as you know, consumer spending is around 2/3 of economic growth, gdp, if the consumer has on average a decline in real disposable income, that means that less real consumer spending and real economy growth, it is right to point out, it is not just the payroll tax or just marginal tax rates on the people 450,000, we also said for people at 250 or 300,000 for a family your itemized deductions phase out. that is a significant number of people, and consumer incomes that are being taxed. neil: 2013, what are we looking at. >> probably economy growth 1.5 to 2%, the fourth year in a row of 2% economic growth. as you noted, we have had job

growth about 150,000 for the last two years, we do not see an economy picking up steam. and part of is it is real wages are actually declining. and taxes are going up. neil: well, on that happy note, adieu, until next week, thank you very much. >> thank you. neil: john silvio, wells fargo, a smarty smart chief economist. neil: i'm not fat, are too skinny? what is so crazy about my insisting i don't have a wait problem when the president can say we don't have a spending problem? pla

neil: this is a relief. we don't have a spending problem. that making retail a lot better, that is what president obama told speaker john boehner. according to "wall street

journal," like these guys saying they are not nerds. >> we're college men now, isn't college great, this is going to be a great year. neil: or this guy saying he is italian. >> brian, let me handle this. >> peter what are you doing? speaking italianian. [speaking gibberish] neil: the president paz t has te kidding, to you, he said in context of those remarks, that take away all of the problem we have in health care spending, rein them in, the problem all but goes away, what do you say? >> i think that president does not get it. he doesn't get much of really is happening in the world.

but most fundamental problem that the world is beleaguered by, this country, especially, immediately, is we have a government that is too big, and too cumbersome, too clumsy, too counter productive to the private sector, our nation right now is like a pig riding a pony in the kentucky derby, thinking it might be able to win, you have to reduce the size of that pig or the pony does not have a chance, if we don't face up to that, this big fat, messy, massive counter productive goofy government will kill the private neil: senator, you argue that spending is helpful in an environment like this. >> well, we have to cut spending, interesting to hear the description of "wall street journal" quoting john boehner, who is quoting the president. you don't have to do that, look

on the internet. clips of the president saying we have a debt problem, we need to reduce spending and increase revenues. neil: you are saying that john boehner is lying? >> i'm saying it is interesting that from "wall stree "wall str" my only point is this -- >> i'm saying that speaker stood by those remarks, you -- someone is lying? >> well, well let me say this. neil: let the senator answer, let the president describe for himself ha he said, he has done it many times he believes that spending cuts must happen. neil: but they don't happen. >> my point about spending is, at a time you with a weak economy, if you cut, 20% of federal spending immediately, there is no reputable economist is a they'd that is not good. neil: we don't have to worry

about that, it not happy, dec dick armey does that worry you, your party had a chance, and they didn't, isn't the fault as much with them for not getting the cuts necessary? >> sure, the fault lies on both sides, there is no doubt. and part of it is this kind of bassettization of kings. neil: this is a family show. >> i believe that is an appropriate word. neil: it is. >> keynes would have said. you have to match it more than double with with real cuts in spending, the president talks about, oh, yeah, i'm for spending he means i want to increase by a smaller amount

than i otherwise would have wanted, to we're talking about culting spending cutting out bad programs that person who had it best was jimmy carter he tried to do washington to do a zero-based budget. we have look at every program of the government and say does this akoch blue chip somethina-- accr america? neil: it does not appear we started this year on a promising note in that regard. maybe hope springs eternal, senator, you are troubled what your old colleagues are condock concommenting? >> i'm troubled we have a government that does not seem to make good decisions. this is not complicated. we have health care costs that are ratchetting out of control, we need to fix that. we went to two wars at the same time we did a big revenue cut. everyone understands, you can't do that without ratchetting up

big deficits, let's fix these and have a planned approach. neil: but they never do, i hear from guys individually talk about doing the right thing, but something happens in collective speech, republicans kind of argue the same thing, then they can't do it. when push comes to shove they can't do it, and there is this capital constipation what is it? >> i call it democrats that don't care, and republicans that down dare, republicans are scared out of the time that the public will not understand, democrats live in mortal fear that the public will understand, it is all about their own personal political future, they have to get past themselves and back to doing real job of service for the country. and that is why a lot of the newly elected members are such a burden to the establishment in office from bike sides, -- both sides, they don't like the

reformers getting elected then coming here, and committing they really met what they said on the campaign trail, they are supposed to adapt and fit in and learn to double speak. that is why the newcomers are a distress to the old timers. >> some of it is promise made by some newcomers, that i will never compromise on anything ever, i will never compromise, well, you know, lubecasion of democracy is to try to find the best of what both parties have. and come together in something that will help, we do need spending restraint, we need additional revenue, we need to be smart about what we invest. neil: but we don't have money to invest. >> coming back to the point, we cut revenue base in 2001. i didn't vote for it then went

to two wars and did not pay for a penny of it, now. now the threat is, you know, let's decide this we will default on the debt we have already occurred. you talk about thought less. it -- thought less, one thing to shoot yourself in the foot another thing to take aim. neil: here is my worry. both sides retreat to their dogmatic sort of almost biblical point, republican never budgeting on revenues, and democrats, there are many like the senator, i would argue maybe like yourself, who could broach middle ground, but, never dare try. we never make progress, we come off of a dial that is 40 plus to 1 tax hikes over spending cuts, setting a not so promising stage

for a year in which we're supposed to address the big budget, big spending issues, we're not. >> some try, john boehner tried, offering plan b, i would guess a lot of people who were horrified, that is only tax increases limited to people at a million and above, get real spending cuts, a lot of people are no, we can't handle that, now they have 450,000, as cap, and no spending cuts, so, what did boehner get? he got his head handed to him by his own party. the fact of the matter is like i said in 85, you can be so hide bound you cut yourself out of the program. now the house majority plays second fiddle to senate minority, and john boehner is

given no credit. neil: senator, you as dire on the forecast? >> you need something like simpson-bowles, a big plan, that so-called cliff plan, that gets us over the cliff, then digs another cliff does not solve the problem, we need serious people to sit down and find ways to solve them. neil: maybe the three of us could broker a deal. thank you so very much. >> thank you. neil: lance the liar wants to spin there are tale, why don't you spin this.

neil: better never than late lance armstrong go away. don't bother you make me want to throw up. i was one of the idiots who believed you and your denials